Trade between Australia and South Asia: Prospects for a bilateral free trade agreement?

While multilateral approach to trade liberalisation remains the most important trade policy approach for Australia, the Australian government has recognized that bilateral and regional trade agreements have a significant role to play in the current global trading environment. Free trade agreements (FTAs), which improve market access and strengthen trade flows, are an important vehicle for enhancing bilateral trading relationships and improving domestic welfare (Dixon and Rimmer, 2010, p.143). The Australian Government focuses on negotiating FTAs with selected partners where these offer the prospect of significant gains ahead of what will be achievable in the WTO process. So far, Australia has signed WTO-consistent FTAs with some important trading partners: New Zealand, the U.S., Singapore, Thailand, Chile, and ASEAN New Zealand (Siriwardana, 2006, 2007). These bilateral and regional trade agreements deliver great benefits where the parties are willing to move faster and undertake more profound liberalisation than what can be achieved by the WTO multilateral trading system (Lloyd and Maclaren, 2004; Lloyd, 2010).